Board Characteristics, Audit Fees, and Political Connections: An Integration of Resource Dependence and Agency Theories

Audit risk reduction depends on the pivotal role of effective boards. However, auditors’ professional judgment is influenced by political connections, potentially impairing audit quality. The purpose of this study was to examine the impact of board characteristics on audit fees. Specifically, the moderating role of political connections will be examined. This study evaluated a sample of ۱۰۷ companies listed on the Tehran Stock Exchange (TSE) from ۲۰۱۶ to ۲۰۲۳. To test the research hypotheses, pooled or panel data regression models were employed. Based on the empirical results, increasing board independence and financial expertise are associated with lower audit fees. Although political connections moderated the relationship between board independence and audit fees, they had no significant effect on the relationship between board expertise and audit fees. Political connections also directly affect the relationship between board independence and audit fees by altering corporate governance mechanisms and increasing demand for high-quality independent audits. Strict audit regulations indicated a strong institutional environment, and in such an environment, the impact of political connections on auditing is likely to be reduced. Therefore, political connections cannot have a significant moderating effect on the relationship between board expertise and audit fees. This study integrated board characteristics and political connections in an emerging-market context, thereby advancing the audit literature. Practical insights are provided for regulators, auditors, and corporate governance reformers.

کلیدواژه ها:

Audit fees ، Board Independence ، Board Financial Expertise ، Political Connections